In this new era of financial change, long term bank growth and profitability hinge on the ability to attract and retain loyal customers. However, this is made all the more difficult when consumers are continuously fragmenting their business across several different financial institutions.
According to the results of an online banking survey recently conducted by BVK, nearly 9 in 10 consumers use more than one financial institution with the average number just over three. The most common reasons cited for using more than one financial institution is to obtain better rates, deals or lower fees.
The power of service provides the greatest potential to set a bank apart for good or for ill, but almost half of consumers DO NOT think their primary financial institution has their best interest in mind. Banks need to ask themselves why? Interestingly, 93% of respondents in our study still said they were satisfied with their financial institution. This means that there is not much room to capitalize on generalized dissatisfaction as a way to entice customers to switch as well as the fact that high satisfaction and loyalty rates do not prevent switching nor equate to loyalty. Consumers in our study who moved accounts to their primary bank were neither significantly more satisfied nor significantly more loyal to that institution than those who moved accounts away from it.
With high satisfaction and loyalty simultaneous with defection, it is notable that more than 4 in 10 bank customers say they want their relationship with their bank to be a “committed partnership,” but only 3 in 10 say they have that. Likewise, 15% want a “best friend” while just 4% have that.
It is important that banks rethink what relationship they have with their customers as well as what being someone’s “primary” bank means. Likewise, banks cannot be lulled by high satisfaction or loyalty scores as both do not prevent switching. Instead evaluate what you are doing well, what you need to stop doing, and start doing with respect to rates/fees, convenience and service in order to stem future defection.